Question

A, B and C are partners sharing profits in 2 : 2 : 1. D was admitted with `1/5`th share of profits, and it was agreed that A would retain his original share. D brings his share of goodwill, ₹ 1,20,000 in Cash. The following balances appeared in their books at this date: Particulars Amount (₹) Amount (₹) Plant   3,00,000 Investments   2,00,000 Investment Fluctuation Reserve   20,000 Advertisement Suspense Account   60,000 Contingency Reserve   90,000 Capitals:     A   4,00,000 B   3,00,000 C   2,00,000 Sundry Debtors 1,26,000 1,18,000 Less: Provision for Doubtful Debts 8,000 It was agreed that: The plant is overvalued by 25%. The market value of Investments is ₹ 1,50,000. Bad-debts ₹ 6,000 be written off, and a provision for doubtful debts be maintained @ 10% on debtors. You are required to choose the correct option:

A’s Capital A/c balance will be:

Options

• ₹ 3,72,000

• ₹ 3,60,000

• ₹ 3,64,000

• ₹ 3,69,600

Answer 1

₹ 3,72,000

Explanation:

Dr.	A’s Capital A/c		Cr.
Particulars	A	Particulars	A
To Advt Suspense A/c `(60,000 xx 2/5)`	24,000	By Balance b/d	4,00,000
By Revaluation A/c	40,000	By Contingency Reserve A/c `(90,000 xx 2/5)`	36,000
By Balance c/d	3,72,000
	4,36,000		4,36,000